Individual investors’ direct holding in NSE cos hits 5-year low, mutual funds on rise

In a significant shift in the ownership pattern of Indian equities, the share of individual investors in companies listed on the National Stock Exchange (NSE) declined to a 5-year low of 9.11% as on March 31, 2026, down from 9.28% as on December 31, 2025, according to data from PRIME Database Group.

The decline was seen across both segments of individual investors. Retail investors’ share fell from 7.25% to 7.12%, while High Net Worth Individuals (HNIs) saw their share dip from 2.03% to 1.99% during the quarter. Overall, individual investors were net sellers to the tune of ₹13,134 crore in the March quarter.

Mutual funds ownership hits record high

At the same time, indirect participation through domestic Mutual Funds (MFs) continued its strong upward trajectory. MF share rose to an all-time high of 11.46% as of March 31, 2026, up from 11.10% in the previous quarter, marking the eleventh consecutive quarter of increase.

This trend reflects a structural shift in investor behaviour. Back in March 2012, MF share stood at just 3.21%, compared to individual investors’ 8.51%.

Fourteen years later, while individual investor share has remained broadly stable at 9.11%, MF ownership has surged to 11.46%, highlighting a growing preference for professionally managed investments.

FIIs fall to 14-year low

Meanwhile, Foreign Institutional Investors (FIIs) saw their share decline further to a 14-year low of 16.13%, down from 16.60% in the December 2025 quarter. The gap between MF and FII ownership narrowed sharply by 83 basis points in the March quarter to just 4.67%, nearly halving from 9.34% as on December 31, 2023. At its peak, this gap was 17.14% on March 31, 2015, when FII share stood at 20.70% and MF share at 3.56%.

The shift is also evident in flows. Mutual Funds recorded net investments of ₹1.42 lakh crore during the quarter, supported by steady SIP inflows. In contrast, FIIs recorded net outflows of ₹1,31,122 crore, comprising ₹1,41,141 crore outflow in the secondary market and ₹10,019 crore inflow in the primary market.

DIIs strengthen grip with record share

On the back of strong MF participation, Domestic Institutional Investors (DIIs) increased their overall shareholding to an all-time high of 19.24%, up from 18.72% in the previous quarter. DIIs invested a net ₹2.51 lakh crore during the quarter. Alongside MFs, Insurance companies invested ₹28,784 crore, Banks ₹1,621 crore, and Alternative Investment Funds (AIFs) ₹512 crore.

Combined ownership of DIIs and individual investors (retail + HNIs) reached a record 28.34%, indicating a clear shift in market control towards domestic participants. FIIs, once the dominant non-promoter shareholder category, are no longer the primary drivers of market direction.

Sector-wise allocation changes also stood out. DIIs increased their exposure to Healthcare from 6.19% to 6.93%, while reducing allocation to Information Technology from 8.45% to 7.55%. FIIs, on the other hand, increased allocation to Commodities from 7.27% to 8.07%, while cutting exposure to Financial Services from 31.85% to 30.75%.

Government ownership (as promoter) rose to 9.42% from 8.96% during the quarter. However, long-term data shows a decline in PSU holdings, with the ‘President of India’ stake falling from 77.08% in June 2009 to 65.44% in March 2026, largely due to divestment.

A total of 35 companies witnessed simultaneous stake increases by promoters, FIIs, and DIIs during the quarter. 

Holding values

In value terms, FII holdings stood at ₹65.66 lakh crore, marking a 15.98% decline over the quarter. Their share in free float decreased to 32.26% from 33.02%, while share by volume dipped to 5.49% from 5.51%.

DII holdings were valued at ₹78.29 lakh crore, down 11.15% quarter-on-quarter. However, their share in free float increased to 38.47% from 37.24%, and volume share rose to 7.20% from 7.04%.

Mutual Fund holdings stood at ₹46.64 lakh crore, down 10.76%, with free float share rising to 22.92% from 22.09%, and volume share increasing to 4.62% from 4.56%.

Insurance companies held ₹22.06 lakh crore, a 12.75% decline, but their free float share increased to 10.84% from 10.69%, and volume share rose to 1.19% from 1.17%.

The Life Insurance Corporation of India (LIC) held ₹15.11 lakh crore, down 13.63%, with its share at 3.71% versus 3.72% earlier. Its free float share rose slightly to 7.42%, while volume share remained unchanged at 0.61%.

Retail investors held ₹28.97 lakh crore, down 15.15%, with free float share declining to 14.24% from 14.43%, and volume share falling to 15.92% from 16.26%.

HNIs held ₹8.10 lakh crore, down 15.31%, with free float share decreasing to 3.98% from 4.04%, while volume share increased slightly to 7.28% from 7.24%.

Overall, the March 2026 quarter underscores a decisive structural shift in Indian equity markets, away from direct retail participation and foreign dominance, towards institutionalised domestic investing led by Mutual Funds and DIIs, reinforcing the growing financialisation and self-reliance of the market.

Indian stock market

The Indian stock market is likely to remain under pressure in the coming week as investors grapple with rising crude oil prices, persistent foreign fund outflows, and escalating geopolitical tensions.  

Alongside these macro triggers, a busy earnings calendar is expected to keep stock-specific action high, even as the broader sentiment stays cautious.

During the last trading session, the Nifty declined 0.73 per cent to close at 24,000, recovering from its day’s low, while the Sensex slipped 0.78 per cent to end at 76,891 compared to the previous session.

The sell-off was largely led by oil-sensitive stocks, as crude prices stayed elevated above the $100-per-barrel mark.

Geopolitical developments will also remain a key overhang. Concerns around a potential escalation in tensions between the United States and Iran have kept global markets on edge.

Crude oil prices will continue to be a crucial factor for domestic equities, given India’s heavy reliance on imports.

Although prices eased slightly after reports of Iran’s willingness to engage in talks, Brent crude continues to hover near $108 per barrel, while West Texas Intermediate remains around $101.

Currency movements are another important trigger. The Indian rupee recently hit a record low against the US dollar amid rising oil prices before recovering some ground.

(with inputs from syndicated feed)